Key Investor Takeaways
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Guitarra processing throughput reached up to a steady 720 tpd, more than 40% above the previous 500 tpd nameplate capacity following Phase 1 crushing and milling modifications.
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The next expansion targets 1,200 to 1,500 tpd, with the new 11x12 ball mill installed and commissioning expected in November 2026. Sierra Madre said the Phase 2 milling target is now expected more than eight months ahead of schedule.
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Underground development is accelerating to supply the expanded plant, with approximately 2.6 kilometers of development drives completed since June across Guitarra, Nazareno, and Coloso.
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Several near-term mine and exploration milestones are approaching, including planned initial production from higher-grade San Raphael blocks by the end of October and the start of a 30,000-meter East District drill program in Q4 2026.
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Sierra Madre is pursuing growth beyond Guitarra through Del Toro, where it outlined a US$12 million, 30,000-meter exploration program and a separate US$10 million possible restart program targeting an initial 800 tpd run rate, with production slated for mid-2028.
Guitarra Plant Reaches 720 TPD as Mine Development Accelerates
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) reported that processing throughput at its Guitarra silver-gold mine complex in Estado de Mexico, Mexico, reached up to a steady 720 tonnes per day following Phase 1 expansion modifications, while underground development advanced across Guitarra, Nazareno, and Coloso.
Throughput at the Guitarra processing plant increased to as much as a steady 720 tonnes per day following modifications to the existing crushing and milling circuits. The new rate represents an increase of more than 40% from the previous nameplate capacity of 500 tpd. Additional modifications are scheduled following commissioning of a new 11x12 ball mill.
"We continue to advance our Phase 1 and Phase 2 expansions at Guitarra. With the new ball mill now installed, Sierra Madre has also accelerated underground development. We have started groundworks for the permitted dry stack tailings facility expansion, a key component of our Phase 2 plan to increase throughputs to 1,200 tpd to 1,500 tpd. We look forward to updating the market as we advance towards Phase 2 expansion," Chief Operating Officer and Executive Chairman Greg Liller said.
Foundation construction and installation of the 11x12 ball mill have been completed. The foundation and cement base required 400 cubic meters of cement and 16 tonnes of steel rebar. Installation of the drive motor, cyclones, and instrumentation is underway, with commissioning expected in November 2026.
Combined with the existing ball mills, the new mill is expected to support the Phase 2 target of 1,200 tpd to 1,500 tpd of milling capacity, which the company said would be achieved more than eight months ahead of schedule.
Sierra Madre has accelerated development at all three mines within La Guitarra, Guitarra, Nazareno, and Coloso, to provide feed for the expanded processing plant. Approximately 2.6 kilometers of development drives have been completed since June 2026. More than 800 meters of access and production drives have been completed since July.
At Nazareno, the 2023 mineral resource estimate included a measured resource of 309,877 tonnes grading 215 g/t silver and 0.55 g/t gold, or 257 g/t silver equivalent. Inferred resources totaled 753,784 tonnes grading 229.2 g/t silver and 0.29 g/t gold, or 251 g/t silver equivalent. Silver equivalent was calculated using a 77.27:1 silver-gold ratio. Reconciliation from actual stope mining to date has shown higher gold grades.
At the Guitarra mine, more than 1.5 kilometers of development have been completed since June. Work in the lower Central mine area has accelerated, and the area now contributes an important portion of mill feed.
Development needed to bring the Los Angeles bulk tonnage deposit into production has also started. Sierra Madre said the new design is expected to provide easier access and haulage alongside a lower future mining cost. Development and dewatering at San Raphael I and II have accelerated following the purchase of additional pumps. The current mine plan calls for initial production from higher-grade blocks by the end of October 2026.
Sierra Madre is also examining the possibility of bringing a small portion of the East District into production. An initial mine design has been completed at Santa Ana, where the company is contemplating beginning construction of a portal in 2027. Mining is planned using long-hole methods.
The 2023 resource estimate for Santa Ana included 761,292 measured tonnes grading 159 g/t silver and 0.19 g/t gold, or 174 g/t silver equivalent. The inferred resource totaled 544,892 tonnes grading 178 g/t silver and 0.13 g/t gold, or 188 g/t silver equivalent.
Groundwork has also begun for the fully permitted Phase 4 dry-stack tailings expansion. Trees have been measured and marked for cutting under SEMARNAT requirements, with clearing scheduled for October. Bid documents for earthworks have been distributed, and contractor mobilization is scheduled for November 2026.
The first construction phase consists of three parts with a capacity of 877,000 tonnes. Total capacity within the permitted area is more than 5 million tonnes.
Precious Metals Face Rate Pressure as Gold Tests Support and Silver Rebounds
Gold traded at US$4,158.05 per ounce on September 29, up 1.05% on the day but down 6.36% over the previous month, according to Trading Economics. The metal remained up 7.77% year over year. Trading Economics said gold had traded near US$4,100 after a sharp decline in the previous session as elevated oil prices, inflation concerns, and expectations for tighter Federal Reserve policy weighed on the non-yielding metal.
Silver traded at US$60.89 per ounce, up 0.43% on the day. The metal was down 8.43% over the previous month but remained up 30.55% year over year. Trading Economics reported that silver had rebounded above US$61 per ounce on Tuesday after falling to a more than seven-week low in the previous session.
Trading Economics said silver had dropped more than 5% on Monday as a sharp increase in crude oil prices raised concerns about potential inflationary pressure and the prospect that central banks could maintain higher interest rates for longer. The source said markets were pricing in nearly a 70% chance of a Federal Reserve rate increase as early as October and a 95% probability of an increase in December. Investors were awaiting the ADP employment report, PCE inflation data, and comments from Federal Reserve policymakers for additional indications on monetary policy.
VSA Capital analyst Oliver O'Donnell, CFA, reiterated a BUY recommendation and CA$2.70 per share price target.
Reuters reported on September 27 that gold had fallen 4% on Monday to a more than seven-week low as rising oil prices increased inflation concerns and expectations for tighter monetary policy. Spot gold fell as low as US$4,110.55 during the session, its lowest level since August 5, while higher Treasury yields and a stronger U.S. dollar added pressure.
"We've got crude oil prices sharply higher. And that suggests still more problematic price inflation, which suggests a tighter Federal Reserve monetary policy," market analyst Jim Wyckoff said. He said higher Treasury yields and the U.S. dollar at multi-week highs were "creating a perfect storm to push the metals prices sharply lower."
In a September 28 commentary published by Kitco Media, Tom Zarix wrote that gold's recent price action "remains corrective" and identified US$4,100.68 as the first support area he was watching. He said a failure to hold that level would shift attention toward a deeper support region between US$3,946.74 and US$3,886.64.
Zarix cautioned that reaching either area would not itself confirm a reversal, writing, "The reaction after price reaches support is more important than the level itself."
He also identified US$4,550.04 as an important resistance level in assessing a potential recovery. "A sustained recovery above this area would provide stronger evidence that the market has moved beyond a temporary bounce and is beginning a broader recovery," he wrote.
Zarix identified US$5,141.04 and US$5,367.75 as conditional longer-term resistance areas rather than forecasts, while emphasizing that gold first needed to establish a low and move through intermediate resistance.
Analysis Highlights Higher Throughput, Expansion Plans, and Growth at La Guitarra
Third-party analysts and commentators pointed to Sierra Madre Gold and Silver's rising throughput at La Guitarra, its ongoing production expansion, and the potential for additional growth from higher grades, exploration, and the advancement of Del Toro.
In a September 14 report, Caesars Report's Thibaut Lepouttre said Sierra Madre was approaching completion of its Phase I production expansion and expected the company to confirm an increase to 750 to 800 tonnes per day within weeks.
"Sierra Madre is doing all the right things, and the next 18 months will be instrumental for the company to continue to execute," Lepouttre wrote. He said the Phase I expansion, combined with higher grades and recovery rates, "should already have a meaningful impact on the production numbers in Q3 and Q4."
Using Q2 grades and slightly higher recovery rates, Lepouttre estimated production could reach approximately 800,000 ounces of silver and 12,000 ounces of gold, equivalent to approximately 1.5 million silver-equivalent ounces using a 60:1 silver-to-gold ratio. He described those estimates as "the lower end of our expectations for 2028 and beyond."
Lepouttre also pointed to the capacity of equipment being incorporated into the expansion. He said the mill being installed had a capacity of 900 tpd, compared with the initially anticipated 600 to 700 tpd, while the refurbished crusher had a capacity exceeding the requirements of the planned 750 to 800 tpd Phase I operation.
"It does feel like the Phase I expansion is being completed with Phase II in mind," Lepouttre wrote.
He also cited Sierra Madre's financial position, writing that with "a working capital position of north of US$25M and a positive free cash flow, Sierra Madre is in an excellent position to further advance and improve La Guitarra while also pushing the past-producing Del Toro project forward." The report did not disclose a formal rating or price target.
Dominic Frisby of The Flying Frisby included Sierra Madre among his 10 largest gold-mining positions in a September 17 report, although he described the company as "more a silver play than a gold play." Frisby noted that La Guitarra had been steadily increasing throughput, reaching 672 tonnes per day in August compared with its original 500 tpd capacity, and pointed to plans to increase throughput further to 1,200 to 1,500 tpd.
Frisby wrote that Sierra Madre was "already generating revenue, and it has expansion potential, both from exploration and increased production." Discussing his position, he added, "I am content to hold as this grows." Frisby's report did not disclose a formal rating or price target.
VSA Capital analyst Oliver O'Donnell, CFA, reiterated a BUY recommendation and CA$2.70 per share price target in his September 2 research note. The CA$2.70 target implied a 25% return from Sierra Madre's September 1 closing price of CA$2.15.
O'Donnell maintained the valuation despite reductions to VSA Capital's near-term earnings forecasts. His valuation combined a CA$3.11 per share fair value based on an EV/resource methodology with a CA$2.07 DCF-derived target to arrive at the CA$2.70 12-month target.
O'Donnell cited progress with the La Guitarra expansion, including throughput reaching 672 tpd in August, 34% above the previous 500 tpd level. He wrote that the reported throughput "gives us confidence in our throughput forecast."
He also addressed the combination of increased throughput and the anticipated transition from lower-grade development material to higher-grade in-resource zones, describing the potential earnings effect as "multiplicative."
Despite the changes to VSA Capital's forecasts, O'Donnell wrote, "We caution against our revised forecasts being viewed as a deterioration of the overall story." Regarding financing for the expansion, the report stated, "The balance sheet is well placed to fund the remainder of the program."
Expansion, Exploration, and a Second Mine Restart Program Set the Next Stages
Sierra Madre's September 2026 corporate presentation outlined additional work at La Guitarra and the East District, followed by exploration and a possible mine restart at Del Toro.
At La Guitarra, the company's two-stage expansion plan targeted Phase 1 capacity of 750 tpd to 800 tpd, followed by Phase 2 capacity of 1,200 tpd to 1,500 tpd. The presentation said the subsequent expansion was intended to increase throughput by more than 100% from previous levels by Q3 2027. It also stated that no additional permits were required for the expansions and that the work was expected to be fully funded from the treasury and cash flow.
The expansion plans included construction of a new paste fill and thickener plant, addition of a fourth ball mill and second cone crusher, and an increase in the conveyor circuit's material-handling capacity. Phase 2 plans included a second crushing circuit, replacement of a smaller-capacity ball mill, and construction of a new permitted 5.8-million-tonne dry stack tailings storage facility, with commissioning identified for Q3 2027. The presentation said the 2026 and 2027 crushing circuit additions would produce a finer, minus one-quarter-inch product compared with the existing minus three-quarter-inch product, with the finer grind intended to increase recoveries.
Exploration at La Guitarra's East District represented another ongoing program. Sierra Madre outlined a US$3.5 million exploration and mineral resource estimate program and a planned drill program of more than 30,000 meters. District-scale geological mapping had delineated 59 kilometers of mineralized quartz veins and breccias, while more than 1,400 drill holes totaling 236,000 meters had previously been completed across La Guitarra.
Within the East District, more than 25 kilometers of metasediment-hosted veins and more than 13 kilometers of volcanic-hosted veins had been mapped. Detailed surface mapping, surveying, and mapping and sampling of historic workings were underway as part of drill target definition.
The presentation identified Q4 2026 for the start of East District drilling and said permits had been received for 22 drill pads. A 3D model built from surface mapping, old workings, and historic data was being used to guide the first phase of the 30,000-meter program, which will initially test up to 30 mapped vein systems.
Phase One plans included seven holes at the Tlacotal area, each between 1,000 and 1,500 meters long and designed to intersect multiple vein systems. Four holes were planned at the Magdalena vein in the Rincon area, targeting the vein system below historic workings. Three holes were planned to test veins that were productive at the Los Locos mine, with the holes also intended to support wedge drilling for infill, offsets, and additional drilling.
Beyond La Guitarra, Sierra Madre's presentation outlined a separate exploration and restart program at the Del Toro silver mine. The company intended to commence the Del Toro restart process in mid-2027, with production slated for mid-2028.
The Del Toro exploration program carried a US$12 million budget over 24 to 30 months. Plans included four geologists, 10 helpers, 30,000 meters of diamond drilling, and 20,400 assays, with a 20% contingency included in the program. A new resource report was expected within 18 months of the acquisition, with the company targeting a new resource report for early 2028.
The presentation identified exploration targets, including disseminated and veinlet-style zinc near the Perseverancia shaft, thin mantos with zinc, copper, silver, and possibly gold at the Cotorras mine workings, copper mantos at Mina Esmeralda, and fractures, veinlets, and breccia with zinc at El Picacho.
Sierra Madre also outlined a US$10 million Del Toro possible restart budget over one year. The budget was designed to allow for mine startup at an 800 tpd run rate, with an aim to later increase the rate to 1,600 tpd. The presentation identified US$5 million for the mining development restart, which may be funded from cash flows.
The restart budget included US$5.3 million for mining equipment, US$2.3 million for the plant, US$1 million for the laboratory, and US$1.7 million for a 20% contingency. Annual carrying costs while exploration is completed were listed at US$2 million.
Streetwise Ownership Overview*
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX)
| Date | Old Symbol | Old Shares | New Symbol | New Shares |
|---|---|---|---|---|
| 07/09/13 | QRS:TSXV | 1 | SM:TSXV | 0.6355 |
Existing Del Toro infrastructure, as described in the presentation, included the developed San Juan, Perseverancia, and Dolores mines, which are accessed through surface portals. Mining methods identified included long-hole, cut-and-fill, and shrinkage stoping. A dewatering system had been installed at San Juan, where the water table was approximately 240 meters below the deepest active zone.
Site infrastructure also included a processing plant, workshops, analytical laboratory, temporary ore stockpiles, waste rock and tailings storage facilities, water management and diversion structures, offices, drill core and logging facilities, water ponds, power substations, and power lines. The plant included three mills with a total capacity of 3,650 tpd.
Ownership and Share Information1
Sierra Madre Gold and Silver Ltd. has a market cap of CA$384.04 million, with 261.25 million shares outstanding. The company's 52-week range is CA$1.01-CA$3.25.
Institutions own 41.4% of shares, while strategic investors, including First Majestic Silver Corp. (AG:TSX; AG:NYSE; FMV:FSE), own 24.7%. Management and founders own 19.2%, and the remaining shares are held by retail.
Frequently Asked Questions About Sierra Madre Gold and Silver and the Guitarra Mine
What is Sierra Madre Gold and Silver's Guitarra mine processing throughput?
Sierra Madre Gold and Silver reported that its Guitarra silver-gold processing plant reached up to a steady 720 tonnes per day, more than 40% above its previous nameplate capacity of 500 tpd following Phase 1 crushing and milling modifications.
How much does Sierra Madre plan to expand production at the Guitarra silver-gold mine?
Sierra Madre's Phase 2 expansion targets milling capacity of 1,200 to 1,500 tpd. The company said its new 11x12 ball mill, combined with its existing mills, is expected to support that target more than eight months ahead of schedule.
When will Sierra Madre's new Guitarra ball mill begin commissioning?
Commissioning of the new 11x12 ball mill is expected in November 2026. Foundation construction and installation have been completed, while installation of the drive motor, cyclones, and instrumentation is underway.
What are Sierra Madre's plans for the Guitarra, Nazareno, and Coloso mines?
Sierra Madre has accelerated underground development at Guitarra, Nazareno, and Coloso to provide additional feed for the expanded processing plant. Approximately 2.6 kilometers of development drives have been completed since June 2026.
When could Sierra Madre begin production from higher-grade areas at Guitarra?
The current mine plan calls for initial production from higher-grade blocks in the San Raphael I and II areas by the end of October 2026. Development and dewatering of those areas have accelerated following the purchase of additional pumps.
What is Sierra Madre's East District exploration program at La Guitarra?
Sierra Madre outlined a US$3.5 million exploration and mineral resource estimate program that includes more than 30,000 meters of planned drilling. The first phase is designed to test as many as 60 veins, with East District drilling identified to begin in Q4 2026.
What are Sierra Madre's plans for the Del Toro silver mine?
Sierra Madre outlined a US$12 million Del Toro exploration program over 24 to 30 months, including 30,000 meters of diamond drilling and 20,400 assays. The company also outlined a separate US$10 million possible mine restart program.
When could Sierra Madre restart production at the Del Toro mine?
The company's September 2026 presentation said Sierra Madre intended to commence the Del Toro restart process in mid-2027, with production slated for mid-2028.
What production capacity is Sierra Madre targeting at Del Toro?
The possible Del Toro restart budget is designed to support an initial 800 tpd run rate, with an aim to later increase the rate to 1,600 tpd. The existing Del Toro processing plant includes three mills with a total capacity of 3,650 tpd.
What are the latest gold and silver prices?
On September 29, gold traded around US$4,158 per ounce and silver around US$60.89 per ounce, based on the market data cited in the article. Gold remained higher year over year, while silver was up more than 30% over the same period.
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Important Disclosures:
- Sierra Madre Gold and Silver Ltd. is a billboard sponsor of Streetwise Reports. The company pays a monthly sponsorship fee of US$3,000–US$6,000 for banner advertising and an enhanced company profile page. Streetwise Reports’ editorial content is fully independent and is not influenced by sponsorship.
- As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sierra Madre Gold and Silver Ltd.
- James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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1. Ownership and Share Structure Information
The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.
